With an eye on strengthening infrastructure in the country, Finance Minister Arun Jaitley has proposed setting up of an institution called ‘3P India’ with a corpus of Rs. 500 crore. This will help in mainstreaming public-private partnerships (PPPs) in the sector.
Asserting that lack of infrastructure will not be allowed to hit growth, Jaitley said, “The country is in no mood to suffer…lack of infrastructure and apathetic governance. The task before me today is very challenging because we need to revive growth, particularly in manufacturing and infrastructure to raise adequate resources for our developmental needs,” Jaitley said.
He said that India has emerged as the world’s largest PPP market, with more than 900 projects in various stages of development. “PPPs have delivered some of the iconic infrastructure like airports, ports and highways, which are seen as models for development globally. But we have also seen the weaknesses of the PPP framework, the rigidities in contractual arrangements, the need to develop more nuanced and sophisticated models of contracting and develop quick dispute redressal mechanisms,” Jaitley said.
He said his government is committed to improving infrastructure in all sectors including roads, port, airports, railways, urban, rural and industrial infrastructure besides ensuring adequate flow of funds and financing of projects.
“As an innovation, a modified Real Estate Investment Trusts type structure for infrastructure projects is also being announced as Infrastructure Investment Trusts (InvITs), which would have a similar tax efficient pass-through status, for PPP and other infrastructure projects,” he said.
These structures would reduce the pressure on the banking system while also making available fresh equity, he said adding, “I am confident these two instruments would attract long term finance from foreign and domestic sources including the NRIs.”
Also, he announced enhancing present corpus of pooled municipal debt obligation facility with participation of several banks to finance infra projects in urban areas on shared risk basis to Rs 50,000 crore.
“Present corpus of this facility is Rs 5,000 crores. This government has a major focus of providing good infrastructure, including public transport, solid waste disposal, sewerage treatment and drinking water in the urban areas.”
Experts said that 3P is a path-breaking idea in the infrastructure sector, as the country is waiting for re-formatting of PPP projects, including the existing model concession agreements (MCAs), negotiations and re-negotiations.
“3P should become a global think-tank. This is one of the biggest steps,” said one of them.